Prepaid iPhones are cheaper in the long run, but you pay more up front

For some time now, I’ve been pondering whether to bolt from AT&T and sign on with another carrier. The company’s treatment of its grandfathered, unlimited customers – of which I am one – along with the tendency for its data network to bog down are the two main reasons I’m considering defecting.

I am, however, on an AT&T family plan, which generally makes switching carriers a more expensive proposition. I share minutes with four other people and we pay one fee for unlimited texting. The few phone calls I make usually to other members of the family plan, so I actually use very few minutes, since calls between family members are free.

Switching to a new carrier would change this equation, and I’ve been researching what it would cost. I’ll probably make the leap when Apple introduces its next iPhone, likely this fall, so I’ve got some time.

So I was very interested to see John Brownlee’s piece at Cult of Mac arguing for buying a prepaid iPhone from a smaller carrier. Apple recently began allowing Cricket and Virgin Mobile to begin selling iPhones that aren’t subsidized by fixed contracts like those from AT&T, Sprint and Verizon. You pay more for the hardware up front, but because there are no monthly data or text charges, you pay lower costs over time.

Brownlee lays out the differences in a handy chart that makes a confusing situation much clearer.

He declares the Virgin Mobile deal to the best one, even though your upfront costs for a 16-GB iPhone 4S are significantly higher than the other prepaid plan he maps out from Cricket.

With that in mind, while Cricket’s a great deal, Virgin’s $40-a-month plan is a real winner. You don’t get Cricket’s unlimited minutes, but you get more than the big carriers, and you’ll pay almost $200 less over the course of 24 months than you would on Cricket.

If you’re willing to make do with fewer minutes, Virgin has an even tastier deal: a $30 a month plan that includes 300 minutes, unlimited data and unlimited texting. If you opt for that deal, you can have an iPhone 4S for $1369.99 over 2 years, which is over a thousand dollars less than an AT&T or Verizon plan.

Of course, there are some caveats here. The prepaid carriers are only offering at the 16-GB iPhone 4S or the 8-GB iPhone 4. If you’ve got a lot of music or video to store on your phone and want a 32- or 64-GB model, you’re out of luck. (Apple sells unlocked iPhones with larger storage capacity for use with AT&T, Verizon and Sprint, and they’re quite pricey: $749 for 32 GB and $849 for 64 GB.)

Also, note that Cricket’s unlimited data is not full-speed unlimited. The company has what it callsa “Fair Use” policy that throttles your speed after you use more than 2.3 GB of data in a billing period on an iPhone.

Brownlee is only charting specific voice plans. He mentions other plans in the story, but these are likely among the most popular.

The biggest issue, of course, is the higher upfront costs. Unlocked smartphones aren’t new, but Americans generally are more willing to pay a higher overall cost over time rather than shell out big initial bucks for a phone.

I’m probably not apt to go with a Cricket or Virgin Mobile plan when the next iPhone comes out (presuming these carriers offer the latest phone from Day One) because I don’t have that much cash to burn. In addition, I’ll probably spring for the 64-GB model, as my music, photos and apps are already straining the capacity of the 32-GB iPhone 4 I have now.

I’ll also be interested in having access to an LTE network – assuming the next iPhone has that – and there’s no guarantee these smaller carriers will be able to offer that, either.

How about you? Are prepaid iPhones and other types of smartphones more appealing to you?

Dwight Silverman | Techblogger, social media manager

Connect

Upgrade your geek with Dwight Silverman

Search TechBlog

Keyword search across all the entries in this blog.

Categories

Categories

Search TechBlog by month/year

Search TechBlog by month/year

Browse previous blog posts by month and year of entry. You'll see all the posts for that time period.

Select Month

Show Earlier

Browse previous blog posts by month and year of entry. You'll see all the posts for that time period.